Sundial Growers (NASDAQ:SNDL) stock is up by more than 9% as its meeting of shareholders inches closer. The meeting, which will occur tomorrow, July 21, will discuss several business objectives, such as board nominees and a reverse stock split. SNDL shareholders were eligible to vote on a reverse split that will range from a 10-for-1 ratio to 25-for-1. The deadline for voting fell on July 19.
Sundial has stated that it is pursuing a reverse split in order to regain compliance with Nasdaq’s $1 minimum bid price requirement. Shares of SNDL stock are currently trading below 40 cents.
Unlike a stock split, a reverse stock split reduces the amount of outstanding shares. As a result, each share will increase in price, which is Sundial’s goal. Besides the change in shares outstanding and share price, nothing else about the company will fundamentally change if the reverse split is approved.
July 21 Brings Key Decisions for SNDL Stock
If approved, the board will decide the ratio of the reverse stock split. In the instance of a 10-for-1 reverse split, shareholders will receive 10 shares of SNDL for each share of SNDL that they own. Board Chair Greg Mills added:
Having considered factors including trading liquidity, access to capital, and regulatory restrictions, our Board believes that it is in the best interest of Sundial and its shareholders to maintain its Nasdaq listing and has tabled the Consolidation resolution to do so.
Senate Hearing for Marijuana Decriminalization
Meanwhile, a major catalyst for marijuana stocks is just on the horizon. On July 26, a Senate Judiciary Subcommittee will meet to discuss the decriminalization of marijuana at the federal level. At the meeting, politicians may discuss the Cannabis Administration and Opportunity Act (CAOA). Still, there is no confirmation that politicians will introduce the CAOA at the meeting. However, Senate Majority Leader Chuck Schumer has promised that the act will be introduced before the August recess.
The CAOA would mark a major shift in the U.S.’s perception of cannabis. It would de-schedule marijuana federally, expunge prior marijuana convictions, and transfer regulatory authority to the U.S. Food and Drug Administration (FDA). In addition, it would impose on marijuana products. Some of the tax revenue would be funneled toward communities affected by the prohibition of marijuana.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.